The Reserve Bank of India’s (RBI’s) decision to give relaxation in provisioning norms to banks and permitting them to spread mark-to-market (MTM) losses over four quarters will provide a Rs 27,000-crore breather to banks in the fourth quarter of fiscal 2017-18, rating firm Crisil has said.

Crisil said banks profitability has come under intense pressure as provisioning requirements have been rising with ageing of non-performing assets (NPAs), withdrawal of various restructuring schemes prior to February 2018 causing an increase in NPAs, and a sharp rise in bond yields since September 2017 leading to significant MTM losses in their gilt investments.

“Accounting for the MTM losses over four quarters would mean nearly Rs 8,000 crore provisioning relief including write-backs for banks in the last quarter of fiscal 2018,” Crisil director Rama Patel said.

“Another relief worth Rs 19,000 crore, in the form of lower provisioning or write-back, would also ensue because the RBI has permitted banks to achieve 50 per cent provisioning on accounts referred to NCLT by June 2018 instead of March as stipulated earlier,” Patel said.